Research In Motion (RIMM) was spotted a Dark Cloud Cover reversal candlestick on Aug 22. Due to the high options premium, I only bought one contract of ITM Oct 130 Put @ $9.90. The stock was very bearish on Monday Aug 25 but went sideways for the next few trading session.

Since the trade was on the correct side of the flow order, I further added another contract on Thursday Aug 28 and the 3rd contract on Friday Aug 29 achieving an average price of $11.57.

On Friday U.S. stocks ended the week in the reds, registering monthly gains with the indexes. A July drop in personal income and a worse quarter than forecast for Dell Inc. supporting a bearish view ahead of the long Labor Day weekend led to the negative finish.

Stocks struggled from the start of the session as Dell announced earnings per share results that missed the consensus estimate, and then compounded matters by warning of a slowdown in IT spending dragging others in the tech sector with it.

Friday session was beneficial to this trade and by close, the option premium has increased to $14.20 with a total profit of $877.00 or 22.7%.

A stop is place @ $12.00 to protect my initial capital giving it ample room to accommodate the daily noises should it decide to slide further down. On the other hand I will still have a small profit if RIMM become bullish for the next one or two trading sessions. The initial stop will be change to a trailing stop instead to trail for more profit should the bear continue to dominate on next week’s session.

“The key to making money in stocks is not to get scared out of them” - Peter Lynch

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